Students studying at accredited institutions are eligible for a tax credit of up to $2,500. Of these, up to 40% (up to $1,000) can be received as tax return directly to the US bank account or as a check in the mail. Credit is determined according to the tuition amount. In order to be eligible for the AOTC, the citizen must receive a T-1098 tuition statement form from their institution. In addition, full credit is given to citizens with an income of less than $80,000. The credit offsets and decreases up to a $90,000 income, and citizens with an income greater than $90,000 are not eligible. The credit and return can also be performed by the parents of the student, as long as the student is registered as a dependent on their tax report.
There are several additional tests the parent must pass in order to be eligible:
- The student has not been convicted of drug felonies by the tax year;
- The student has yet to complete the first four years of their higher education at the time of the tax year;
- The student has not claimed the AOTC, or an AOTC has not been claimed in their name, for four tax years preceding the tax year;
- The student has been enrolled for at least one semester and is pursuing a degree or other recognized educational credential;
- Anyone married to a US citizen and filing separately (MFS) is not eligible.
LLC – Lifetime Learning Credit
Students who are not eligible for the AOTC can still be eligible for tax credit for their tuition expanses. This credit is up to $2,000 and cannot be claimed as a tax return. Both academic credits are similar, but their differences enable students not eligible for AOTC to claim this credit.
- The credit has no four-year restriction;
- Can be claimed for non-degree/educational credential courses, as long as the institution is accredited;
- Eligible applicants must have an income not surpassing $68,000 ($136,000 for an American couple);
- Can be filed for someone convicted of a drug felony.
For both credits, grants and scholarships must be taken into account in the calculation.
Higher education institutions participating in the federal student aid program: All universities barring Ariel University and the Interdisciplinary Center (IDC). Additional information can be found here: https://studentaid.gov/understand-aid/types/international
Credit is claimed via form 8863, filed with the 1040 tax report.
All expenses required for enrolling to or attending the institution are valid for calculating the credit. These include fees for various student unions. Course materials are calculated towards the AOTC even if not paid directly to the institution.
